Metrics Matter

Deming theories

Sometimes, I’m asked what is going on at the Beef Board (as in “Heeeeey, whassup?” Not as in “What in the h-e-double toothpicks is up?!?!?”—although that happens too. That’s another rant…er, I  mean blog…though.) Despite some of my more touchy-feely blog shares, when it comes to management, I believe big-time in metrics and measurement. After all, you can’t manage what you don’t measure.

W. Edwards Deming (another one of those darned brilliant Iowans…what’s in the water in that state?), is the granddaddy of modern “measure-to-manage” strategies. Those of you not familiar with Deming might have fun first clicking back and reading some of my earlier blogs on Japan and then researching this great man and his impact on Japanese business systems (and world wide systems as well, but the Japanese were the first to listen and adapt). In 1960, the Prime Minister of Japan, acting on behalf of the Emperor, awarded Deming Japan’s Order of the Sacred Treasure, Second Class. The citation on the medal recognizes Deming’s contributions to Japan’s industrial rebirth and its worldwide success. Historians say Deming was known for his kindness, compassion and humor (Salsburg, 2002). This great man passed away in 1993, the same year he founded the Deming Institute in Washington, DC.  And today, his name and famous 14 points are eponymous with modern, metrics-based management. Many of you have heard me drone on about continuous improvement without giving the Deming Cycle or Deming himself credit—a miss on my part (I cannot even say I am even a very good student of Deming, although I try).

Deming-Cycle-Graphic

Perhaps, in the future, I’ll tell you about some cool new evaluation projects we have going on at the Board this year. But for now, let’s talk about performance.

Metric 1: Producer Awareness and Approval

This bi-annual survey asks checkoff investors if they aware of, and if they approve of, the management of the checkoff program. Many years of data allow us to trend line both awareness and approval of the program. The results of our latest survey, completed in January, show:

  • At 91%, name awareness among producers of the beef checkoff program is on the rise and rated by the independent research firm as “very high”;
  • At 78%, the research found the highest level of producer approval of the program in 21 years;
  • 80% of producers believe the checkoff contributes positively to consumer demand for beef; and
  • 79% say the checkoff does a good job of representing their interests

Metric 2: CBB Management

Each year, the Beef Board undergoes an external, independent financial audit.  The external audit determines if our financial statements are fairly stated in all material aspects. Since the inception of the program, all external audit reports have resulted in “unqualified” or, in laymen terms, “clean” opinions. In no case has the external audit found any evidence that CBB was not in compliance with the Act & Order or the AMS Investment Policy. In fact, for the last four years, the auditors have not only issued unqualified opinions, but also have not had a single recommendation for improvement – such as changes in policies or procedures.

Last December, we received the results of a USDA Agricultural Marketing Services, or AMS, Management Review of the Beef Board—the first ever in the history of the Beef Board. The objective of the AMS Management review was to ensure the Board was in compliance with the Act & Order, the AMS Guidelines, the AMS Investment Policy, the CBB Bylaws and CBB’s internal policies and procedures. The review had no findings. At the conclusion of the review, AMS commended excellence of management and operations at the Cattlemen’s Beef Board.

While we’re talking about audit metrics, I’d like to address the Office of Inspector General “peer review” of its own report issued early in 2013. This review confirmed the initial conclusion of the 2013 OIG eport that found no audit issues or lack of compliance by AMS, the Beef Board, or Beef Board contractors was found.

Personally, I don’t know of any organization that has been more painstakingly audited that the Beef Board and Beef Checkoff Program have been in the last couple of years – but the above findings (or lack thereof) certainly provide a validated body of assurance.

Metric 3: Consumer Willingness to Pay and Beef Demand

The latest Oklahoma State Food Demand Survey data indicate that, in March 2014, consumer willingness to pay more for hamburger increased by 5.42 percent. Remember, though, that if consumers are continually willing to pay the high prices that supply has helped dictate in the current marketplace — it’s a strong litmus test as to the value they see in the beef and beef products they are finding in the meat case and enjoying in restaurants.

Due to the Board’s 2013 Beef Demand Determinant Study  and the checkoff’s ongoing market research, we know that price – along with demand drivers including food safety, product quality, health, nutrition, and social aspects and sustainability, play roles in consumers’ decisions about purchasing your end product.

It’s so important to understand the role of these drivers. Willingness to pay is an absolutely critical factor in beef’s success in the marketplace – in  maintaining and growing beef demand in 2014 and 2015.

When consumers see value in a product, they have a higher willingness to pay for it. In fact, checkoff market research indicates that we have seen a cutback in at-home eatings of beef, particularly in roasts and some in steak. To put this in perspective, our loss of in-home servings per capita is somewhere in the range of 5 to 6 percent as of February.   Per person, that is a reduction of three to four beef servings per year; across the nation, that is close to a million fewer servings of beef eaten in-home. This coordinates closely to our low supply situation.

The number of meals in-home still exceeds the number of foodservice beef meals. It might be easy for us to forget, however, about the fact that people can really stretch beef in-home, especially ground beef, in spaghetti sauce, tacos, and other ingredient recipes.  Actual volume (as opposed to number of eatings or meals) remains more matched between in-home and foodservice. But the truth is, beef maintains such strength in foodservice that Technomic data indicate since 2009, beef represents the largest pound increase of any protein despite a shrinking supply.

You can start to see, then, that with reduced supply and record prices, a reduced number of in-home beef meals isn’t necessarily an issue. On the other hand (warning, a short trip down a garden path approaches), the shift toward foodservice itself is intriguing and invites further study. With higher prices, I had expected that consumers might shift meals away from foodservice and toward the in-home experience. But John Lundeen, the beef checkoff’s market research guru at NCBA, suggests that a few things are combining for our current situation:

  1. Consumers can still get relatively inexpensive but still very tasty burgers at foodservice.
  2. Millennials particularly like the quality guarantee they get at a restaurant. They may say to themselves, “Better to have a chef make that pricey steak than me.”
  3. The celebratory nature of beef fits the foodservice environment very nicely.
  4. Has to do with modern lifestyles and smaller households: Roasts often are not seen as a fit with a small household, for example. And we also see less steak consumption in single-person households.

So, we know lower available supplies mean declining consumption (please, please remember—consumption isn’t the same as demand). Recently in the media, I saw a story saying that chicken consumption had overtaken beef consumption for the first time in 100 years—of course, because these days we simply do not make as much beef as we have in the past. We cannot eat what we don’t make, so obviously we see beef consumption dropping. That said, the continued strength of beef demand throughout last year and until today surprised even the savviest of market analysts.

As Kansas State ag economist Glynn Tonsor pointed out recently in a Twitter discussion, the entire industry must continue to work together to align beef offerings closely with the desires of those consumers willing and able to buy them.  In the end, this is what supports continued demand strength. (Here’s a great blog on why internal food fights are senseless, which makes this point much better than I ever could.)

If you do not know how to ask the right question, you discover nothing. ~W. Edwards Deming

It is not necessary to change. Survival is not mandatory. ~W. Edwards Deming

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It’s About the Journey

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In my last post, I talked about opportunity. In 2013, I had the opportunity to go to Japan and Taiwan as an Eisenhower Fellow. Many of my posts on this blog document the flow of ideas and thoughts this experience generated in me. I met new people, I ate new things (LOTS of new things), I even wore new things (I’m on my way to traditional baths in this photo–a wonderfully relaxing experience). My Eisenhower Fellowship truly changed my life and my POV. If you are in agriculture, you may have what it takes to be an Eisenhower Fellow–you’ll never know unless you try. The 2015 application period is open now. I encourage you to explore it further. After all, life is a journey, not a destination (thanks, Ralph).

“I tramp a perpetual journey.”
― Walt WhitmanSong of Myself

Project Cowherd 2020

Castle Rock in the foreground, Pikes Peak in the background.

On many weekend days, I enjoy a spectacular view from my chair at the breakfast table. Our home, situated on top of a hill, offers views of Pikes Peak, with Castle Rock in the foreground, that take my breath away. The crystal clear air shimmers with bright sunlight. (I feel just like Yertle the Turtle with this view.)

Yertle the Turtle

I’ve heard because Colorado has low humidity, the air is clearer than in other parts of the country. The bright sun coupled with intensely clear air make me glad I am alive. 

But then, if I were somewhere else, with another spectacular view, I would also feel blessed, wouldn’t I? After all, if your view clouds over–you may not be aware that anything is blurring your clear line of sight.

Our vision is like that. Our lives are like that. Blurred and blocked and fettered by our experiences and our prejudices, our inability to imagine things that have potential gets in our way. That is why expanding ourselves helps our world grow, and paves the way for imagination too. 

(Truth is, Pikes Peak MAY be the most beautiful mountain in the world. But until I’ve seen the Alps, I’m withholding judgment.)

Bear with me. This is my unique and individual (ok, some would say weird) way of introducing my topic–the cowherd in 2020

When my son was young, I used to encourage him, saying “Almost no decision cannot be undone later. Do what you think is right.”

But what I didn’t tell him was that there are opportunities that only come once. Some only come once in a lifetime. If you don’t have the vision and the courage to take them when they come, you lose them. Forever. 

What if I told you that beef producers (indeed the entire beef business) has one of those huge, once-in-a-lifetime opportunities, right this very minute? 

An opportunity so big, that we may never get this chance again. An opportunity with so much potential, it could change our business forever. 

It is the chance to rebuild our cowherd, reset our future, reform our beef supply.

With cow numbers so low, and herd expansion shivering on the brink of fruition, we have an unmatched opportunity to determine our own future. 

What if every commercial cattleman and woman, dedicated him or herself to Project Cowherd 2020–an aggressive, genetic improvement plan for the future of our business? What if we called upon our business partners, feeders, processors, extension agents, seekstock suppliers, to help us to do just that? How much progress could be made?

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I’ll bet you my friend Don Schiefelbein would say A LOT. (I’m cheating here, because I’ve heard him say something similar, without the cool name Project Cowherd 2020, on several occasions!)

It’s about you, envisioning how your herd could work best for you, and for the beef consumer, in 2020. If you asked your buyer how your cattle did on the rail, what would you want to hear? What would your calves’ feed efficiency look like? How would your cows perform in your environment? Dream big. Build (or rebuild) your perfect herd for 2020 by beginning with the end in mind.  

What if EVERY producer started today? I believe if a majority of us dedicate ourselves to Project Cowherd 2020 this year, we have the opportunity of a lifetime.

I’m not blowing sunshine up your skirt here. Our national herd is very small. While we rebuild, we have enormous potential for improvement–if we rebuild consciously and carefully. 90% of successful innovation is timing. By 2020 our cowherd could be the best it’s been in history–with the potential for optimum production efficiency, enhanced business sustainability and practices, improved consistency and consumer acceptability, optimal diversity of beef offerings to satisfy everyone’s demands. Or it could look about the same as it did 10 years ago. Your choice. 

A Chinese proverb says: The best time to plant a tree was 20 years ago. The next best time is today. (Has anyone mentioned to you how much beef China is going to want by 2020?)

It’s a big dream, a wildly important goal. But also one that is completely achievable with dedication, and clear vision. Would you rather write your destiny, or sit still and see what others do for (or to) you? Does we have what it takes to write our own destiny? I guess we shall see…and sooner rather than later. 

Courage to Dance

Remember the little ditty “Sometimes you feel like a nut, sometimes you don’t”?

I’ll bet Dancing Man felt like a nut, for a short time, anyway.

Looks kind of like the Harlem Shake, right?

Why do you think Dancing Man makes us uncomfortable? I think it is because ultimately, we fear being judged and then alone, wiggling our naked belly (or bared soul) for all to see.

In a few days, I will join the other Eisenhower Fellows (both USA and International) in Philadelphia for a kick-off orientation. The session facilitator sent us some pre-read (or, in this case pre-“watch”) material and the Dancing Man video and commentary came to my inbox among the excellent articles recommended. The common theme? Directive leadership: outdated and ineffective. Instead, success comes from collaborative, community energy generated when people trust each other.

“Life’s most persistent and urgent question is, ‘What are you doing for others?”

~ Martin Luther King, Jr.

Are you embarrassed by Shirtless Dancing Man? I was, a little bit. I thought, “C’mon man! Nobody wants to see that! Sit down and put your shirt on!

But then, Fully Clothed Follower showed up. And I thought, “Hey, good for that guy!

Then I watched, intrigued, as a flood of followers came into the frame, dancing and whooping with joyful recklessness.

Then, I felt a tiny flash of fright. (Are we going to dance at EF orientation!? Yikes!)

I’ve noticed in some business environments, empathy and compassion for others is out of vogue, while self-promotion and arrogance is appreciated as powerful—so much so that those who exhibit servant leadership can be derided as weak, feeble or out-of-touch. I’ve even been directly advised to be “more aggressive and talk loudly, or these guys will decimate you!” Are we so riddled with self-doubt that we must prove our hegemony constantly (especially to ourselves, lest we lose control)?

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Leaders who “go it alone” end up depleted, angry and bitter. Energized, effective leaders sow the seeds of freedom and encouragement, to reap a harvest of creativity and continuous progress. Energized leaders know that two brains are better than one—especially when those two brains come from entirely different perspectives.

“Giving people self-confidence is by far the most important thing that I can do. Because then they will act.”

~Jack Welch

When the ground shifts from terra firma to quicksand; when selfish politics and jockeying for power robs my spirit, leaving me gasping, I try to engage actively in the service of others, embrace and enjoy differences, enable and nurture creative freedom and revel in the new growth I see. Pretty soon, I’m re-energized, growing and back on track—and so is my team.

My son had a high-school teacher, an Episcopal priest, who strode around the classroom, waving his arms passionately, black cassock flying, as he lectured students. (Yes, it was a public high school and he was an incredible role model of unabashed moral behavior). He boldly told his students that the gifts they’d been given in life weren’t theirs to hoard, protect or flaunt. Gifts weren’t given for personal advancement. Gifts only thrived when you gave them away.

A gift of acceptance. A gift of collaboration.

A gift of confidence. A gift of community. A gift of success.

It all starts with the courage to dance.

MNP and USA Fellowship class of 2013

Eisenhower Fellowship Class of 2013, including both MNP and USA Fellows